Credit Policy Checklist

(Excerpt from The Encyclopedia of Credit)

A well-defined and complete credit policy includes:

1. formal organization of department
2. job description, titles, and review process
3. credit department budget guidelines
4. credit documentation required for credit file
5. methods of gathering credit information
6. time limits for credit decisions
7. established credit lines and procedure for establishing new lines
8. procedure for communicating the decision to the customer
9. procedure for communicating the decision to management
10. procedure for communicating the decision to the sales department
11. procedure for communicating the decision to operations
12. guidelines for dealing with and assisting marginal accounts
13. a collection policy that reduces borrowing cost
14. a collection policy that deals with slow-paying accounts
15. a collection policy that minimizes bad debts
16. a policy for unearned discounts/unauthorized deductions
17. a policy for the handling of disputes
18. a policy for the handling of returned and damaged merchandise
19. establishment of terms of sale
20. policies for using secured transaction for protection
21. a policy for the use of guarantees
22. guidelines for reporting to upper management

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